The Parabolic SAR

The parabolic SAR attempts to give traders an edge by highlighting the direction an asset is moving, as well as providing entry and exit points. In this article, we’ll look at the basics of this indicator and show you how you can incorporate it into your trading strategy. We’ll also look at some of the drawbacks of the indicator.

The Indicator

The parabolic SAR is a technical indicator used to determine the price direction of an asset, as well as draw attention to when the price direction is changing. Sometimes known as the “stop and reversal system,” the parabolic SAR was developed by J. Welles Wilder Jr., creator of the relative strength index (RSI).

On a chart, the indicator appears as a series of dots placed either above or below the price bars. A dot below the price is deemed to be a bullish signal. Conversely, a dot above the price is used to illustrate that the bears are in control and that the momentum is likely to remain downward. When the dots flip, it indicates that a potential change in price direction is under way. For example, if the dots are above the price, when they flip below the price, it could signal a further rise in price.

As the price of a stock rises, the dots will rise as well, first slowly and then picking up speed and accelerating with the trend. The SAR starts to move a little faster as the trend develops, and the dots soon catch up to the price.

Understanding the Parabolic SAR

One of the most interesting aspects of this indicator is that it assumes a trader is fully invested in a position at any point in time. For this reason, it is of specific interest to those who develop trading systems and traders who wish to always have money at work in the market.

The parabolic SAR indicator is graphically shown on the chart of an asset as a series of dots placed either above or below the price (depending on the asset’s momentum). A small dot is placed below the price when the trend of the asset is upward, while a dot is placed above the price when the trend is downward. As you can see from the chart below, transaction signals are generated when the position of the dots reverses direction and is placed on the opposite side of the price.

As you can see from the right side of the chart, using this indicator by itself can often lead to entering/exiting a position prematurely. So, many traders will choose to place their trailing stop loss orders at the SAR value, because a move beyond this will signal a reversal, causing the trader to anticipate a move in the opposite direction. In a sustained trend, the parabolic SAR is usually far enough removed from price to prevent a trader from being stopped out of a position on temporary retracements that occur during a long-term trend, enabling the trader to ride the trend for a long time and capture substantial profits.

Markets and the Parabolic SAR

The parabolic SAR performs best in markets with a steady trend. In ranging markets, the parabolic SAR tends to whipsaw back and forth, generating false trading signals. Wilder recommended augmenting the parabolic SAR with use of the average directional index (ADX) momentum indicator to obtain a more accurate assessment of the strength of the existing trend. Traders may also factor in candlestick patterns or moving averages. For example, price falling below a major moving average can be taken as a separate confirmation of a sell signal given by the parabolic SAR.

The parabolic SARis used to gauge a stock’s direction and for placing stop-loss orders. The indicator tends to produce good results in a trending environment, but it produces many false signals and losing trades when the price starts moving sideways. To help filter out some of the poor trade signals, only trade in the direction of the dominant trend. Some other technical tools, such as the moving average, can aid in this regard.

What is Cryptocurrency Staking?

Cryptocurrency staking has become an alternative way for crypto investors to make money from the market. Staking of cryptocurrencies is usually possible by digital currencies using the proof of stake (PoS) and the delegated proof of stake (DPoS) consensus mechanisms.

What is Proof of Stake?

Proof of Stake (PoS) concept states that a person can mine or validate block transactions according to how many coins he or she holds. This means that the more Bitcoin or altcoin owned by a miner, the more mining power he or she has.

What is staking in cryptocurrencies?

Cryptocurrency staking is the act of hodling crypto in your wallet for a specific period, then earning interest as a result of that. Users receive rewards by hodling the cryptocurrencies, and the earnings differ depending on the length of time an investor hodl the cryptocurrency in their wallet. The longer the staking duration, the higher return an investor gets.

Staking is used as a way of validating transactions on a blockchain, similar to what mining represents in the proof of work (PoW) protocol. In a PoS blockchain, the higher the coins a user holds in his/her account, the higher the chances that they would take part in a transaction validation process.

The next validator in a PoS system is usually chosen in a random process which is heavily influenced by the number of coins a user is holding at that particular time or in some cases, the length of time the user has been keeping the cryptocurrency.

How does crypto staking work?

Crypto staking works in a similar fashion to traditional fixed deposit investment accounts, the longer your staking time, the higher the reward you would earn at the end of the tenure. Staking coins differ from one cryptocurrency to another, but the underlying principle behind then remains the same. If you want to stake coins on most PoS and DPoS networks, you would be required to operate a node or masternode, or you can join one of them.

The staking mechanism also has a delegation feature that allows users to delegate other people to carry out votes on their behalf. Users can earn coins if they entrust their vote to a trusted party, and is one favorite way that investors make money via the staking system. This feature gives delegate extra validation power, who will, in turn, pay its customers coins for their votes.

Benefits of the staking protocol

Staking cryptocurrencies have several advantages to the users, and they include;

Investors with a large holding of a cryptocurrency would be able to validate transactions on the blockchain. This is unlike the PoW system where the job falls solely to miners.
Unlike the PoW protocol, the consensus mechanism in this system eliminates the need for high-end computer networks, which usually consumer high energy and cost a lot to maintain. This makes staking an environmentally friendly cryptocurrency consensus method.
The value of PoS cryptocurrencies does not depend on ASICs and other mining equipment, with their prices only affected by a change in the market conditions.

The probability of a 51% attack is usually lower in PoS cryptocurrencies compared to their PoW counterparts.

Is Blockchain Secure?

The security of personal data, especially that which is stored online, is a human right. It has failed to evolve and actually been deteriorating in recent years. Blockchain technology has the potential to entirely change this.

All of our data is stored online. We concede some of our most private information to the platforms that we use on a daily basis and we are often unaware which of our personal data is collected. Many users still conceal some of their most valuable data behind the shockingly weak combination of a username and password, with over half of users openly admitting they use the same password for all of their logins.

Is Blockchain Secure?

Yes, blockchain is innately secure. It utilises powerful cryptography to give individuals ownership of an address and the cryptoassets associated with it, through a combination of public and private keys, made up of combinations of random numbers and letter. This solves the issue of stolen identity as addresses are not directly associated with users’ identity, whilst also being far harder to compromise. Private keys are even more secure as they are considerably longer. It is in this way that blockchain offers a greater level of security to the individual user as it removes the need for weak and easily compromised passwords and online identities.

Is a Private Blockchain More Secure than a Public One?

The practise of building a private blockchain to preserve security is a severely misguided one. It is true that a private blockchain allows for the screening of participants, whereas a public blockchain is essentially accessible to everyone. However, it is this exposure that allows a public blockchain to develop immunity to hacks. For example, Bitcoin is the original public blockchain, having withstood years of relentless hacking without ever being compromised, getting more resilient with every hack that it withstands. This epitomises that public blockchains, much like Lisk’s, are considerably superior than private blockchains.

Can a Blockchain get Hacked?

No, a blockchain itself does not get hacked. The security of blockchain technology should not be confused with news about hacks, such as those carried out on cryptocurrency exchanges. Similarly, to normal hacks, the underlying vulnerability allowing for hacks on exchanges stem from centralisation. Despite blockchain technology being decentralized, there are still centralized aspects of it, such as cryptocurrency exchanges. This means that hackers can attack a single point in the hope of gaining access. As such, these hacks have given rise to calls for decentralized exchanges and it is only a matter of time before these become the main platforms allowing people to trade cryptocurrencies.

Such hacks epitomise how important it is for every aspect of blockchain to be as decentralized as possible, as distributed information and assets are definitely more secure.

The security of blockchain has roots in the cryptography that it utilizes however it is the technology’s decentralized nature that provides the foundations for its security. In fact, it is this distribution and decentralization that has got most people excited about the potential of blockchain technology.

Blockchain in Agriculture

With 40% of the global workforce, agriculture sector presents 6.4% of the entire world’s economic production and its total worldwide production is $5,084,800 million. If you have ever visited a farm, you would have seen that farmers have complicated ecosystems with seasonal financing structures, careful timing and a lot of moving parts.

After the food leaves the farm for the market, it becomes a part of the vast supply chain involving a lot of intermediaries. Everyone would like to know where the food has been produced before it is served on the plate. What if you could check the quality of food before you eat it? It could become possible with the use-cases of blockchain in executing contracts and tracking information transparently. Blockchain agriculture is one of the compelling use cases that makes the process of growing and supplying food simpler. The agriculture supply chain can provide all involved parties with a single source of truth.

Applying Blockchain to Agriculture

According to ReportLinker, the blockchain in food supply chains and agriculture is estimated to be USD 60.8 million in 2018 and is projected to reach USD 429.7 million by 2023. The Dutch Ministry of Agriculture, Nature and Food Quality financed the first research project, “Blockchain for Agrifood” that has been proposed to explore blockchain implications for agrifood. Pilot studies indicate that blockchain technology enabled food to be traced from farm to grocery store in just a few seconds.

Blockchain also helps to keep tabs on abundant commodities and reduce cases of illegal harvesting and shipping frauds. The United Nation reveals that food frauds cost the global economy around $40 billion per year because of illicit trades.

Procurement Tracking

The challenge for the agriculture sector is to track and pay for the delivery of foods. Nowadays, the process depends on a third-party for coordinating the goods delivery. The sellers usually have an agent who ensures that the goods are delivered safely and buyers have an agent to recommend payment and audit the delivery. The involvement of multiple agents adds high costs to the system and makes the entire process time-consuming. With the blockchain, the whole process can be simplified to a single distributed ledger. Commodity buyers can directly interact with the supplier that speeds up the process and reduces the time to settle a payment. Also, the companies can save on additional agent fees and farmers can receive a larger share of sales directly with a blockchain based solution.

With the features like traceability and auditability, farmers can directly sell crops or food to the restaurant or individuals without the need for intermediaries.

Crop and Food Production

With the help of smart farming, IoT sensors could fetch important information like the temperature of the soil, water level, fertilizer details and more and send it to the blockchain. Based on the data saved in blockchain, smart contracts could trigger and execute the specific actions. It will help in enhancing the quality of the farming process as well as produced crops.

Weather crisis control

Farmers have to face the issues of unpredictable weather conditions throughout the year. Monitoring and predicting such factors can be crucial for better crop survival. Due to excessive rains, it becomes difficult for grown crops to tolerate flooding. Consumers are never aware of when did the crops suffer bad weather conditions and why did market face high surge pricing. As it is possible for the involved members to trace the weather conditions from the blockchain solution, farmers can quickly request and receive insurance claim through smart contracts.

Managing Agricultural Finance

Lack of transparency in credit history and agreements are some of the significant problems confronting between smallholders and financial inclusion. Today, financial services do not only allow smallholders to invest in farming but also help them in resolving liquidity constraints.

As a result, it becomes challenging for buyers to pay farmers, restricting smallholders to sell crops at comparatively lower rates. With blockchain, the agricultural finance process becomes more transparent and fairer, yet enables shared control accessibility.

The agriculture industry needs to do a lot of work to maintain and build consumer trust when it comes to the food quality check. A blockchain based agriculture solution holds a lot of promise for the agribusiness industry with its ability to bring transparency in the system.

Blockchain in The Fashion Industry

When glamour meets tech, the corollary is very widely accepted by people over the world even though tech-enabled fabric would cost a little extra. Most of the big brands today are changing the course of conventional fashion towards a more outré fashion. Recently Levis launched a SUPER DOPE smart jacket in collaboration with Google specially for people who commute on a bike. It costs $350 yet it is gaining a lot of popularity. You can listen to music, enable google maps, answer phone calls and enable text on your jacket while on-go.

As I see it, the entire culture is shifting its pace and methods to infuse technology and related trends with it. The new way to survive is to adopt technology. Probably this is why most sports gear brand (like Nike) endorse themselves as more of a tech company than an apparel company. Nike is constantly coming up with radical solutions with state-of-the-art sensors to measure heart rate, speed, calories burnt, distance run while performing any activity.

The above case study was a typical example of Internet of Things (IoT) in fashion. Let’s see how Artificial Intelligence (AI) can revolutionise fashion. When I walk into Marks & Spencer, I see a myriad of options not knowing where to go. Also, FOMO clouds my judgment. What would it be like if M&S installs a kiosk in every section where customer can choose the type of fabric they want, the colour, the size et al — and the kiosk tells the customer what the store currently holds! It is like shopping on a mobile app but being physically in the store.

Blockchain critics love to replace blockchain with a regular database even in the most perfect of usecases. What makes blockchain unique is that the data once written onto the ledger can’t ever be changed. It won’t change even if God wants it to change. This means, nobody is more powerful than the other in a blockchain world. Only truth will triumph. Secondly, it is truly decentralised and distributed in nature so everyone can see what exactly is going on. There is NO centralised authority responsible to share the data. This means nobody owns the data. This concept is super powerful when people with dirty hands try to change “facts” just because they can.

Blockchain’s novelty engenders from its unique ability to bridge the gap between physical world and digital world (tokenisation) to create a REAL digital identity on the blockchain. Often, a cryptographic hash or “serial number” is the primary physical identifier which can be traced back to the product. This concept precludes manufacturing of counterfeit items because a “fake” hash can’t be generated.

There are so many social activist groups lambasting big fashion brands for harming animals, environment, or for unethical practices. A lot of consumers are also chary of buying anything that is made of animal skin. So, how about a concept where users know where exactly is the product they are purchasing coming from? Imagine the information about history of provenance is just a QR code scan away?

So many talented people dwell in remote places making intricate fabrics of great value. Most of the times, large fashion brands hire these poor people at a very low wage. This is practically exploiting people in an oppressive way.

In 2017, London designer Martine Jarlgaard, in collaboration with the blockchain company Provenance, took the initiative to produce the unprecedented “smart labels”. The consumer can scan the clothing item to see every step in the production process ranging from raw material to final product. This kind of transparency will likely be a selling point for consumers who increasingly want to know how and where their clothes are made.

At the end of the tunnel, there’s light. Likewise, the end result of blockchain is to integrate and include people in the economy who have been neglected till now. A dApp can be created for the people who are living in a deplorable condition to give them a livelihood. Since blockchain enables P2P trade inherently, there is no need for middlemen in the middle. People can directly buy from people rather than the brands. This would certainly take production back to the local, distributed hubs.

Hard Fork Vs. Soft Fork

A “fork,” in programming terms, is an open-source code modification. Usually the forked code is similar to the original, but with important modifications, and the two “prongs” comfortably co-exist. Sometimes a fork is used to test a process, but with cryptocurrencies, it is more often used to implement a fundamental change, or to create a new asset with similar (but not equal) characteristics as the original.

Not all forks are intentional. With a widely distributed open-source codebase, a fork can happen accidentally when not all nodes are replicating the same information. Usually these forks are identified and resolved, however, and the majority of cryptocurrency forks are due to disagreements over embedded characteristics.

There are two main types of programming fork: hard and soft.

Hard forks

A hard fork is a change to a protocol that renders older versions invalid. If older versions continue running, they will end up with a different protocol and with different data than the newer version. This can lead to significant confusion and possible error.

With bitcoin, a hard fork would be necessary to change defining parameters such as the block size, the difficulty of the cryptographic puzzle that needs to be solved, limits to additional information that can be added, etc. A change to any of these rules would cause blocks to be accepted by the new protocol but rejected by older versions and could lead to serious problems – possibly even a loss of funds.

For instance, if the block size limit were to be increased from 1MB to 4MB, a 2MB block would be accepted by nodes running the new version, but rejected by nodes running the older version.

Let’s say that this 2MB block is validated by an updated node and added on to the blockchain. What if the next block is validated by a node running an older version of the protocol? It will try to add its block to the blockchain, but it will detect that the latest block is not valid. So, it will ignore that block and attach its new validation to the previous one. Suddenly you have two blockchains, one with both older and newer version blocks, and another with only older version blocks. Which chain grows faster will depend on which nodes get the next blocks validated, and there could end up being additional splits. It is feasible that the two (or more) chains could grow in parallel indefinitely.

This is a hard fork, and it’s potentially messy. It’s also risky, as it’s possible that bitcoins spent in a new block could then be spent again on an old block (since merchants, wallets and users running the previous code would not detect the spending on the new code, which they deem invalid).

The only solution is for one branch to be abandoned in favor of the other, which involves some miners losing out (the transactions themselves would not be lost, they’d just be re-allocated). Or, all nodes would need to switch to the newer version at the same time, which is difficult to achieve in a decentralized, widely spread system.

Soft fork

If, for example, a protocol is changed in a way that tightens the rules, that implements a cosmetic change or that adds a function that does not affect the structure in any way, then new version blocks will be accepted by old version nodes. Not the other way around, though: the newer, “tighter” version would reject old version blocks.

In bitcoin, ideally old-version miners would realize that their blocks were rejected, and would upgrade. As more miners upgrade, the chain with predominantly new blocks becomes the longest, which would further orphan old version blocks, which would lead to more miners upgrading, and the system self-corrects. Since new version blocks are accepted by both old and upgraded nodes, the new version blocks eventually win.

For instance, say the community decided to reduce the block size to 0.5MB from the current limit of 1MB. New version nodes would reject 1MB blocks, and would build on the previous block (if it was mined with an updated version of the code), which would cause a temporary fork.

This is a soft fork, and it’s already happened several times. Initially, Bitcoin didn’t have a block size limit. Introducing the limit of 1MB was done through a soft fork, since the new rule was “stricter” than the old one. The pay-to-script-hash function, which enhances the code without changing the structure, was also successfully added through a soft fork. This type of amendment generally requires only the majority of miners to upgrade, which makes it more feasible and less disruptive.

Soft forks do not carry the double-spend risk that plagues hard forks, since merchants and users running old nodes will read both new and old version blocks.

What is Digital Signature

A digital signature is a mathematical technique used to validate the authenticity and integrity of a message, software or digital document. As the digital equivalent of a handwritten signature or stamped seal, a digital signature offers far more inherent security, and it is intended to solve the problem of tampering and impersonation in digital communications. Digital signatures can provide the added assurances of evidence of origin, identity and status of an electronic document, transaction or message and can acknowledge informed consent by the signer.

In many countries, including the United States, digital signatures are considered legally binding in the same way as traditional document signatures.

How digital signatures work

Digital signatures are based on public key cryptography, also known as asymmetric cryptography. Using a public key algorithm, such as RSA, one can generate two keys that are mathematically linked: one private and one public. (for more on Digital signatures work because public key cryptography depends on two mutually authenticating cryptographic keys. The individual who is creating the digital signature uses their own private key to encrypt signature-related data; the only way to decrypt that data is with the signer’s public key. This is how digital signatures are authenticated.

Digital signature technology requires all the parties to trust that the individual creating the signature has been able to keep their own private key secret. If someone else has access to the signer’s private key, that party could create fraudulent digital signatures in the name of the private key holder.

How to create a digital signature

To create a digital signature, signing software — such as an email program — creates a one-way hash of the electronic data to be signed. The private key is then used to encrypt the hash. The encrypted hash — along with other information, such as the hashing algorithm — is the digital signature.

The reason for encrypting the hash instead of the entire message or document is that a hash function can convert an arbitrary input into a fixed length value, which is usually much shorter. This saves time as hashing is much faster than signing. The value of a hash is unique to the hashed data. Any change in the data, even a change in a single character, will result in a different value. This attribute enables others to validate the integrity of the data by using the signer’s public key to decrypt the hash.

If the decrypted hash matches a second computed hash of the same data, it proves that the data hasn’t changed since it was signed. If the two hashes don’t match, the data has either been tampered with in some way — integrity — or the signature was created with a private key that doesn’t correspond to the public key presented by the signer — authentication.

A digital signature can be used with any kind of message — whether it is encrypted or not — simply so the receiver can be sure of the sender’s identity and that the message arrived intact. Digital signatures make it difficult for the signer to deny having signed something — assuming their private key has not been compromised — as the digital signature is unique to both the document and the signer and it binds them together. This property is called nonrepudiation.

Digital signatures are not to be confused with digital certificates. A digital certificate, an electronic document that contains the digital signature of the issuing certificate authority, binds together a public key with an identity and can be used to verify that a public key belongs to a particular person or entity.

Most modern email programs support the use of digital signatures and digital certificates, making it easy to sign any outgoing emails and validate digitally signed incoming messages. Digital signatures are also used extensively to provide proof of authenticity, data integrity and nonrepudiation of communications and transactions conducted over the internet.

Classes of digital signatures

There are three different classes of Digital Signature Certificates:

Class 1: Cannot be used for legal business documents as they are validated based only on an email ID and username. Class 1 signatures provide a basic level of security and are used in environments with a low risk of data compromise.
Class 2: Often used for e-filing of tax documents, including income tax returns and Goods and Services Tax (GST) returns. Class 2 digital signatures authenticate a signee’s identity against a pre-verified database. Class 2 digital signatures are used in environments where the risks and consequences of data compromise are moderate.
Class 3: The highest level of digital signatures. Class 3 signatures require a person or organization to present in front of a certifying authority to prove their identity before signing. Class 3 digital signatures are used for e-auctions, e-tendering, e-ticketing, court filings and in other environments where threats to data or the consequences of a security failure are high.

Uses of digital signatures

Industries use digital signature technology to streamline processes and improve document integrity. Industries that use digital signatures include:

Government – The U.S. Government Publishing Office publishes electronic versions of budgets, public and private laws and congressional bills with digital signatures. Digital signatures are used by governments worldwide for a variety of uses, including processing tax returns, verifying business-to-government (B2G) transactions, ratifying laws and managing contracts. Most government entities must adhere to strict laws, regulations and standards when using digital signatures.

Healthcare – Digital signatures are used in the healthcare industry to improve the efficiency of treatment and administrative processes, to strengthen data security, for e-prescribing and hospital admissions. The use of digital signatures in healthcare must comply with the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

Manufacturing – Manufacturing companies use digital signatures to speed up processes, including product design, quality assurance (QA), manufacturing enhancements, marketing and sales. The use of digital signatures in manufacturing is governed by the International Organization for Standardization (ISO) and the National Institute of Standards and Technology (NIST) Digital Manufacturing Certificate (DMC).

Financial services – The U.S. financial sector uses digital signatures for contracts, paperless banking, loan processing, insurance documentation, mortgages, and more. This heavily regulated sector uses digital signatures with careful attention to the regulations and guidance put forth by the Electronic Signatures in Global and National Commerce Act (E-Sign Act), state UETA regulations, the Consumer Financial Protection Bureau (CFPB) and the Federal Financial Institutions Examination Council (FFIEC).

What is Mimblewimble?

Tested for decades, Mimblewimble uses elliptic-curve cryptography that requires smaller keys than other cryptography types. In a network that is using the Mimblewimble protocol, there are no addresses on the blockchain, and the network’s data storage is highly efficient. Mimblewimble needs about 10% of the data storage requirements of the Bitcoin network. This makes Mimblewimble highly scalable for storing the blockchain, significantly faster, and less centralized. Furthermore, the nature of the protocol allows for private transactions that are highly anonymous (more about this later).

The birth of Mimblewimble

Rejoice, Harry Potter fans! Another reference is coming from the movie fan world. The Mimblewimble Whitepaper was first published on July 2016 in the Bitcoin research channel under the anonymous author name of Tom Elvis Judisor – the French name for Voldemort. Soon after the whitepaper was published – at the end of 2016 -, another anonymous user with the pseudo name “Ignotus Peverell” (the original owner of the invisibility cloak from the Harry Potter universe) started a Github project with the application of the Mimblewimble protocol. This project is called Grin, which released its mainnet on January 15, 2019. There’s also another implementation of Mimblewimble, Beam, that has been already released. We will talk about Grin and Beam later in this article.

Confidential Transactions

This is the point where Mimblewimble comes into the picture. As mentioned before, the protocol proposes a much more efficient system, eliminating inputs and outputs. The UTXO model is replaced by one multisignature for all inputs and outputs which are called Confidential Transactions. If Alice wants to send Bob a coin, both Alice and Bob create a multisignature key that is used to verify the transaction. Confidential Transactions use the Pedersen Commitment scheme; there are no addresses. Instead, the parties share a “blinding factor”. The blinding factor encrypts the inputs and outputs of the transaction along with both parties’ public and private keys. This blinding factor is shared as a secret between the two parties who were engaged in the transaction. Due to the blinding factor replacing addresses, only the two parties know that they were involved in a transaction. This keeps the privacy of the network at a high level. The Pedersen Commitment scheme works as follows. Full nodes deduct the encrypted amounts from both the inputs and outputs, creating a balanced equation that proves that no coins were produced out of thin air. And during the whole process, the node does not know the actual amount of the transaction.

Blockchain and Digital Identity

Technological advancements in the digital space has revolutionized every aspect of our lives, from shopping to collaborating with colleagues to keeping in touch with friends to entertainment to managing our finances. Since the dawn of the Internet, identity management has been a key concern, with billions of dollars being spent on usability, security and privacy.

The identity and access management market is expected to grow from $8.09 billion in 2016 to $14.82 billion by 2021, representing a 12.9% CAGR. Despite this huge investment, managing digital identities continues to be plagued by three Cs – Cumbersome, Costly and Challenging.

With data driving the world today, digital identity is critical to most business and social transactions. This governs the interaction of users in the digital world. But traditional identity systems continue to be highly vulnerable, with single points of failure, attracting continuous attempts to gain access to the complete repository of high value data.

And, with companies prioritizing cybersecurity, identity protection and compliance management, while customer experience is significantly compromised. As individuals, we shoulder the burden of managing multiple online IDs and passwords, while also handling a host of documents, including passports, driver’s licenses, Social Security cards and medical insurance cards.

Blockchain has evolved significantly from the distributed ledger technology created to track bitcoin ownership. This technology can replace traditional systems with a highly trusted mechanism of managing identities. Blockchain can empower users to have greater control over their own identity. Organizations can use the information only with customers’ consent and no central entity would be able to compromise a consumer’s identity.

Blockchain has facilitated the so-called self-sovereign identity, which is inherently unalterable and more secure than traditional identity systems.

This has the potential to completely change the way we use identities to connect to different online services. Individuals would use their self-sovereign ID to verify their identity, removing the need for passwords. As with every lifechanging innovation, there’s been an extended period of evolution, with experts exchanging ideas and little consensus on what self-sovereign ID means!

It’s a concept that stems from the belief that an individual must have control over the administration of his identity. The ID cannot be locked into one site and there needs to be interoperability of the ID across multiple platforms, with user consent. Experts have been contemplating the summation of various identifying information like demographic and employment related data and even information about the individual revealed by other people.

Difference Between Blockchain and Bitcoin

Part of the confusion around what is blockchain versus what is cryptocurrency is due in part that the terms have come into use. Instead of being introduced by formal definition, the term blockchain developed from “chain of blocks”. Cryptocurrency is a sort-of portmanteau of “cryptographic currency”. But the fundamental difference between these concepts has to do with how distributed ledger technology is used.

When Bitcoin was the only blockchain, there wasn’t much of a distinction between the terms and they were used interchangeably. As the technology matured and a variety of blockchains bloomed, the uses quickly diverged from the pure money aspect. Instead, technologists experimented with ideas like decentralized name registry. Other uses utilized the peer-to-peer aspect to deliver messages in a discrete way. In the end, many of these projects failed to find a good use of the technology. The projects left standing helped demonstrate what was possible with beyond buzzwords.

A blockchain is a distributed ledger technology that forms a “chain of blocks.” Each block includes information and data that are bundled together and verified. These blocks are then validated and strung onto the chain of transactions and information in previous blocks. These blocks of transactions are permanently recorded in the distributed ledger that is the blockchain.

Contrasted with blockchain, cryptocurrency has to do with the use of tokens based on the distributed ledger technology. Cryptocurrency can be seen as a tool or resource on a blockchain network. Anything dealing with buying, selling, investing, trading, microtipping, or other monetary aspects deals with a blockchain native token or subtoken.

It is a token based on the distributed ledger that is a blockchain. Cryptocurrency is a digital currency formed on the basis of cryptography, or by definition, “the art of solving or writing codes.” Although all are considered cryptocurrencies, these tokens can serve different purposes on these networks.

Referring to the token as the technology can be right in the case of Bitcoin, but is very different when dealing with other blockchain projects like Ethereum. In this case, the technology is known as Ethereum, but the native token is Ether, and transactions are paid in gas.

Blockchain is the platform which brings cryptocurrencies into play. The blockchain is the technology that is serves as the distributed ledger that forms the network. This network creates the means for transacting, and enables transferring of value and information.

Cryptocurrencies are the tokens used within these networks to send value and pay for these transactions. Furthermore, you can see them as tool on blockchain, in some cases serving as a resource or utility function. Other times they are used to digitize value of an asset.

Blockchains serve as the basis technology, in which cryptocurrencies are a part of the ecosystem. They go hand in hand, and crypto is often necessary to transact on a blockchain. But without the blockchain, we would not have a means for these transactions to be recorded and transferred.